Target Market - Strategic Considerations

It is important for any online marketer to understand his or her target market. Give it the attention it deserves when compiling your small business plan.

Many companies lose millions of dollars by developing products they are unable to sell. Not because there is anything wrong with the product(s) but simply because they do not spend enough time researching their target market.

Remember, and I often use this example, you are not Kevin Costner and your business is not called "Field of Dreams". There is no such thing as: "If you build it they will come". It is pure fiction. Do not make the mistake building a business based on assumptions.

There is an old saying that goes: "It takes two to tango", meaning that in a relationship both parties need to work on making a success of it. This means making an effort to understand and accommodate the needs of your partner. The same principle applies in the business world, except your relationship partner is called a customer. You cannot build a successful online business relationship without understanding your customers.

As a money marker you need to know who are your customers. Who will buy your products or make use of your services?

Target Market Expectations
 

Use the following two steps to help you define your target market:

Step 1: Marketing - Start by determining what the market wants

I have already touched on the subject of marketing and the differences between sales and marketing in Home Based Business Marketing but it may be relevant to briefly look at it again as it is actually the starting point or foundation in helping us to understand the concept of a target market.

Selling is all about selling a product or service to potential customers. Marketing, on the other hand, looks at what the market wants and not at what we want to sell to the market. In other words, selling starts with your business while marketing starts with your potential customers. Big difference!

The best recipe is to first do market research to determine the needs of the market, and, once established, develop strategies to sell to or reach the market you have identified. It is a lot easier and safer selling a product or service if you have already established that there is a need for such a product or service.

Many big companies such as Airbus and Boeing understand the relationship between sales and marketing. For example, neither Airbus nor Boeing will launch a new plane without first determining that there is a market for such a plane. Imagine building a new super plane and spending billions of dollars in development costs just to find out that you are unable to sell the plane or unable to sell a sufficient number of planes to justify your investment!

Unfortunately, many companies make the mistake of developing new products or services without spending enough time identifying their target market and determining if the target market represents a viable business opportunity.

Step 2: Market Segmentation - Establishing your target market

The "market" is a very big place with nearly 6,7 billion people on this planet. We need to brake this big market into smaller pieces. This is called Market Segmentation.

By following the above-mentioned Step 1, you have already identified whether or not there is a market for your product or service. It is also possible that you may come up with a totally different product or service based on the feedback you received from your market research.

Just a short note on Market Research - It is all about understanding the needs and wants of the market. In the case of a small home based business your may get sufficient data by talking to your friends, family, neighbors and some strangers in your local convenience store. Big companies can spends millions of dollars on the services of professional market research companies. Bottom line is that you need to talk to as many people as possible. The bigger your "sample" the more reliable the feedback you will receive.

Try to avoid the shotgun approach where you fire in any direction hoping to hit something. It may seem like an easy approach but will cost you a lot more money and time in the long term than by developing specific strategies suitable to your specific target market. You need to focus on direct targeted marketing.

Back to market segmentation...

As mentioned above, there is nearly 6,7 billion people on this planet. You can split them into many different groups depending on age, income, gender, location, etc. I am not aware of any product that everybody will buy. Let's take an example of a product we all need, water.

Assume we decide to sell our own bottled water. We may make the assumption that our target market is the whole world as we all have a need for water. Right? At first glance, yes. However, we need to be a lot more specific. There is no point looking at a generic product such as food or water. We need to be specific. Depending on the packaging, quality, cost and distribution of our product we may automatically exclude 99% of all people.

Next steps:

Only once we have been able to identify our target market are we ready to move on. Why? Simply because we can only answer many of the other questions in our small business plan if we know our target market. For example, many potential competitors can be discounted even if they have a similar product or service than us but focus on another target market.

By knowing our target market we can evaluate the attractiveness of this market by looking at the following factors:

a. Size of the market - Is the market big enough?

b. Competition - It the market saturated with competitors?

c. Growth Prospects - Is it a growing or declining market?

Once you have identified your target market you will be in a much better position to identify ways of reaching them.

Target Market - Strategic Tips:

Always try to go with the trend and not against it. For example, the Baby Boomers in the US created a huge market for new housing, childcare, etc. With the baby boomer generation getting older and closer to retirement there is a huge market developing for health care information and retirement planning. By following the trend of the market at the right time you can make some serious money online.

Ask yourself the question for how long your target market will remain your target market. If your target market is only kids between the ages of 10 and 12 then your time frame is not very long. It is preferable if you can maintain your target market for longer periods as it is easier and cheaper to keep existing customers than look for new customers.

Consider why people should buy your product or service. Most people will buy due to the following reasons:

a. It satisfy a need - They "want" it.

b. It solves a problem.

c. It feels good.

Where does your product or service fit in?

Take your time to determine your target market expectations and formulate a good and viable target market strategy.

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